The World’s Most Recession-Proof Property Market
“Paris is a market that holds its value.”
That’s how Devon de la Salle from the French property agency Imoinvest began her presentation to our group today. Devon’s a real estate agent, but that doesn’t make her assertion any less true.
Even through le crise, as the French call the global financial meltdown we’ve been living through, Paris apartments, indeed, have held their value. Ask a Frenchman why this is, and he might tell you it’s because his countrymen are so stubborn.
Not to overstate the situation. There was a decline last year in number of transactions, but this is recovering. The number of sales transactions so far this year is up 76% compared with last.
There have been declines in values in sections of the city, as well, but, again, prices are rebounding. Average values across the city are up by 5.3% on an annual basis through April.
Why is Paris continuing so stable and strong? Maybe it has something to do with the French temperament, but I’d say it has more to do with the universal and perennial appeal of this city, the most touristed in the world.
And, importantly, Paris’ ability to ride out the current storm has to do with the French banking system. There’s no such thing as “creative financing” here in France.
“I worked as a real estate agent for years in California,” Devon explained today, “and, boy, did I love creative financing during the hey-day of the market in that part of the world. I made a ton of sales thanks to creative financing. But then we all saw the downside to this approach…”
The trouble in the Paris market today is lack of inventory. There are definitely more buyers than sellers right now. This means you have to be in the market, ready to make an offer when a property that fits your criteria crosses your radar, especially if your focus is the central arrondissements–that is, the 1st through the 8th.
Stephane Adler, our French notaire, who also addressed our group today, confirmed.
As in most of the world, there’s no Multiple Listing Service in France. However, this country has what’s referred to as the “notaire system” for the purchase of real estate. You can’t buy a piece of property in France without a notaire, and for every transaction, careful documentation is kept, including particulars such as number of sales and price per square meter arrondissement by arrondissement.
In other words, even though you can’t do a comps search, you can reference a great deal of information to help you read this market at any time.
Notaire data right now tells us just what anecdotal experience and real estate agent speak tells us, as well. This market slowed, and prices fell, slightly. But recovery is well under way.
I’d suggest that if you’ve ever considered investing in a Paris pied-a-terre, this is a moment of opportunity to act. The euro is down against the dollar, meaning you’ve got more buying power than you have had in more than a year.
Look for an apartment in the heart of the city (again, the 1st through the 8th arrondissements) selling for 300,000 euro, give or take. This budget won’t buy you big (perhaps one bedroom), but it will buy you a solid asset that you can look forward to holding its value for you over the very long haul.
Lief Simon
